PROTECTION AND WEALTH BUILDING STRATEGIES 243praise for the artistic, literary and architectural achievements
in those days coming from various government sponsored pro-
grams for writers and artists, and in public works.
The mystery of the Great Depression is not why it began
but why it lasted so long. The U.S. had been in a severe depres-
sion in 1921, but it lasted 18 months, not 12 years. The answer
appears to be something economists call regime uncertainty.
The Hoover-Roosevelt programs seemed to come out of
nowhere and disappear just as quickly confusing business
leaders. Programs were launched with great fanfare then
abandoned based either on Supreme Court decisions declaring
them unconstitutional or because of their failure to produce
results.
In response, private capital went to the sidelines and re-
fused to invest. Instead of a labor strike, there was a capital
strike. No amount of government intervention could make up
for the lack of private capital investment caused by the policy
uncertainty of those years.
Shlaes makes this clear both through quantitative re-
search, and through individual portraits of Andrew Mellon,
Wendell Willkie, and less known figures such as Bill Wilson,
the founder of Alcoholics Anonymous. These individuals kept
private initiative alive during a decade in which government
pretended to have all the answers
Shlaes has done prodigious research and writes indelibly.
Her book is worth reading for its literary and historical quali-
ties alone. But the book carries important economic lessons for
investors and policymakers today.
As the U.S. struggles through a new depression, regime
uncertainty in policies such as Obamacare, environmental and
internet regulation, and changes in labor laws have once again
caused capital to go on strike. The implication is that the cur-
rent period of low growth in the U.S. will continue indefinitely
until positive structural changes and greater clarity in public